from the now-this-starts-to-get-interesting dept

There was a bit of a fuss in the ongoing Hotfile vs. Hollywood lawsuit a few weeks ago when the judge made a minor ruling on discovery about what Hotfile had to hand over. However, now that Hotfile has officially responded to the complaint and added some counterclaims, the lawsuit is finally starting to get interesting. The MPAA/Hollywood studios' case took a big hit earlier this year, when the judge dismissed the claim of direct infringement by Hotfile. Without that, the MPAA has a much tougher case to prove, since it no longer becomes a straight copyright infringement case, but becomes more focused on whether or not Hotfile is protected by the DMCA's safe harbors. Where the counterclaims get interesting is that, as alleged earlier this year by Hotfile, one of the plaintiffs, Warner Bros., regularly abused its takedown tool to issue takedowns on content for which it did not hold the copyright. As in the situation in which Viacom got into some trouble for issuing takedowns on content it had uploaded itself in the YouTube case, this may serve to undermine much of the studio's arguments.

Most of the response from Hotfile seems focused on proving that it's protected by the DMCA's safe harbors, but there are a few other interesting tidbits, including this one:

On information and belief, Plaintiffs have been
investigating Hotfile for over a year in which time they were aware of particular URLs of files
that they believed to be infringing and had decided to contend that Hotfile’s content protection
policies were inadequate. Rather than diligently and promptly bringing suit, however, Plaintiffs
and their content protection agents delayed in seeking any remedy. Not only did Plaintiffs
inexplicably fail to bring suit or otherwise give Hotfile notice of their allegations during this
period, to the contrary, they repeatedly complimented Hotfile’s content protection efforts,
offered for Hotfile to become a business affiliate, and refrained from using their Special
Rightsholder Accounts to takedown the files they believed were infringing. Plaintiffs thereby
perpetuated the very infringement they now allege in this case. Plaintiffs’ unreasonable delay
resulted in prejudice by causing Hotfile to leave up the files that are now alleged to infringe, inducing Hotfile to maintain the very content protection policies Plaintiffs now impugn, and
causing potentially helpful evidence to be lost....

It also notes that due to the compliments from studios and the questions about business relationships, Hotfile "relied on these
representations believing that the Studios found Hotfile’s content protection policies to be more
than adequate." The specifics here seem to be that Warner Bros. asked for and received a specific tool made by Hotfile to make deletions easier, and then regularly thanked Hotfile for its actions taking down content. Again, that looks bad for WB.

Other than that, the part that's getting attention is the claim that Warner Bros. issued takedowns on content for which it did not hold the copyright. That certainly looks bad for Warner Bros., and at the very least raises significant questions about how Hotfile could be expected to know who held which copyrights when even one of the plaintiffs appears not to know.

Warner has acted
unscrupulously and dishonestly. Not only has Warner (along with four other major motion
picture studios) filed this unfounded and contrived litigation against Hotfile employing overly
aggressive tactics, Warner has made repeated, reckless and irresponsible misrepresentations to
Hotfile falsely claiming to own copyrights in (or to have the owners’ authorization to delete)
material from Hotfile.com. Worse, Warner continued to make these misrepresentations even
after Hotfile explicitly brought this rampant abuse to Warner’s attention, ruling out any
possibility that its wrongful actions were accidental or unknowing. Thus, Warner has knowingly
made misrepresentations and it has engaged in DMCA abuse on an unprecedented scale by
grossly misusing the powerful anti-piracy software tool that Hotfile specially created at Warner’s
request.

The details suggest that Warner started taking down more and more content, even taking down some very popular freeware software that had been purposely uploaded to Hotfile for distribution by its creators. It also appears to have used very questionable simple phrase matching, such as deleting all files that had "the box" in the file name, even if they were totally unrelated to the WB movie "The Box." So that, too, doesn't look good for Warner Bros.

The only thing I'm not sure about here, though, is whether or not Hotfile actually has standing to bring such a claim. I would have thought that it had to be done by the actual copyright holder of the content taken down (or someone else injured by such a takedown). I'm not sure that Hotfile can make such a claim.

Separately, some of these defense and counterclaims are really just directed at Warner Bros., which is only one of the five studios suing -- so Hotfile may still have some issues with the other four. Separately, I just noticed that Paramount is missing from the suing studios. There are six major studios, and all of them except Paramount are involved. That's a bit surprising, since Paramount execs have been some of the most vocal execs speaking out against cyberlockers. Anyone know why they chose not to join in on this one?

Hotfile is saying that specific links it knew were infringing were not taken down. It says that WB knew about these links.
How does Hotfile know what WB knew? Did WB explicitly say to Hotfile "Please don't take down these links, even though we know they're infringing?"

Will this contersuit open up discovery again?

But mainly I think there's wiggle room in:
'“Every time Warner used the SRA tool it expressly certified ‘under penalty of perjury that [it is] the owner or an authorized legal representative of the owner of copyrights’ and it ‘has a good faith belief’ that use of this material is not authorized by the copyright owner,” the complaint explains.'

Pffft! Using software specially crafted by the party allegedly infringing doesn't mean agreeing to "terms" put on it. And if that's outside DMCA, it's outside. -- 2nd, Warner may be legally representing actual copyright owner, or equally, not provably NOT authorized. 3rd, if the special tool matched strins simplistically, that's Hotfile's fault.

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Paramount's just letting the others take point is all

Separately, I just noticed that Paramount is missing from the suing studios. There are six major studios, and all of them except Paramount are involved. That's a bit surprising, since Paramount execs have been some of the most vocal execs speaking out against cyberlockers. Anyone know why they chose not to join in on this one?

Mike, don't you know that it's way better to let your friends take the lead when exploring some dark catacomb forgotten by the world? That way, if they spring a trap and are all killed, you can take their stuff. If they don't, then you get your share of the treasure because "hey guys, I was watching for monsters sneaking up from behind!"

finally a good part against WB/RIAA/MPAA! the agreement that WB makes when they use the provided tool constitutes a contract which the court should uphold. and then maybe just maybe WB is kicked out from lawsuit when they are sued by all affected parties!

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This is worse. Hotfile already had a way to alert them of copyright infringement. Warner Bros. asked them for a tool to make it easier and Hotfile obliged, putting on stipulations that are also in the DMCA. Warner could have refused to use the tool because of those stipulations and instead used their regular alerting tools, but they didn't, so they agreed to that tools terms. This isn't shrink-wrap licensing, this is clearly custom software that the two parties agreed upon before deliverance of the software.

In either case, the stipulations are already in the DMCA, so whether they agreed or not, whether they used that special tool or the regular tool, they are beholden to those terms which are dictated by law.

Re: Paramount's just letting the others take point is all

"powerful anti-piracy software tool that Hotfile specially created"

That's trying to make a feature of following legal requirements to remove the content. Wouldn't impress me as a juror to learn there's so much that process had to be streamlined. Nope, more I look, appears Hotfile makes a desperate try to reverse a bad sitch: "We're removing LOTS of infringing content! And even some more! But Warner is lying their heads off!"

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Good point.

It would be interesting to see if the DCMA stipulation warning was actually part of the design spec that Hotfile put together and Warner agreed to. I'm not trying to suggest that the absence of it would let Warner off the hook for DCMA takedown violations; rather if it was specifically outlined in the design spec for the tool and that spec was agreed to by Warner it'd be additional proof that Warner was acting maliciously.

Give them enough rope...

Giving Hollywood studios or record labels a tool they can use to take down anything they want, with terms that mention perjury, falls under the 'give them enough rope for them to hang themselves with' category.

I suspect this is just the start of a whole new type of DMCA lawsuit "trolling" emerging.

Re: Re: Paramount's just letting the others take point is all

I am, but that particular analogy comes from my Dungeons & Dragons days, where things like this could (and would) actually happen to the parties of adventures wandering the deep forgotten places, seeking riches and artifacts.

Re: Re: Paramount's just letting the others take point is all

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"In either case, the stipulations are already in the DMCA, so whether they agreed or not, whether they used that special tool or the regular tool, they are beholden to those terms which are dictated by law."

You almost persuade me, but I stick to it's outside of DMCA because the source says Hotfile asked for a jury, and believe non-lawyers just won't weigh it on strict legalisms,

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That's not what I read at all. WB had full opportunity inform Hotfile of any infringing material and did not. So, how is Hotfile supposed to magically know the status of the content? Hotfile's argument is why should we do anything if WB isn't willing to? If there's something copyrighted and the owner allows it, no law has been broken. That's licensing for $0. Promoters license for $0 all the time.

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"The only thing I'm not sure about here, though, is whether or not Hotfile actually has standing to bring such a claim. I would have thought that it had to be done by the actual copyright holder of the content taken down (or someone else injured by such a takedown)."
How wouldn't HotFile be injured by that? It make their service look completely unreliable simple for trying to comply with take-down clause in the DMCA safe harbors.

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I would think that none of it violates the DMCA. Use of the tool may not be an official takedown notice depending how an official notice is defined by the DMCA itself. WB put itself in a dubious position by asking for a tool in the first place instead of official notices. Any lawsuit by Hotfile for abuse of it's provided software would be outside of the scope of the DMCA.

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I would tend to agree with you. IANAL nor am I well versed in this aspect of the DMCA, but it would seem to me that the ISP/Cyberlocker/WebsiteOwner/DMCA recipient would be in the best position to identify DMCA abuse and report it or file suit against the abuser.

While the above seems common-sensical to me, Hotfile has the opportunity like any other recipient of a DMCA request to deny it if it is obviously a bogus claim. WB would have no standing to sue Hotfile for not complying with DMCA takedowns that it didn't have standing to file in the first place.

This is one of the biggest problems with the DMCA, because the recipients are so worried about losing their safe harbor for noncompliance that they honor all requests with any scrutiny. In streamlining the DMCA process for WB, Hotfile essentially believed that they wouldn't abuse it (just writing that makes me lol). Now, having the perjury clause in the EULA of the system could potentially provide them the grounds they need to bring the suit. This is going to be an interesting case indeed.

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I'm really trying to understand your argument, but I'm having difficulty following the logic...

Why would Hotfile requesting a jury trial have anything at all to do with the validity of the takedowns under the DMCA which defines the vaildity of takedowns? If WB doesn't own the copyright they have no right to request the content be taken down whether it be through a standard DMCA request or a streamlined request system that they asked to be implemented.

Without seeing the system in question, it's difficult to say if Hotfile should be at fault for simple strings being able to take down longer titles that contain the string. If it is essentially a search engine that returns matching results, then it is absolutely WB's responsibility to verify the titles are accurate. There is no way for anyone to mistake the open source software they had taken down for anything other than what it is. This makes me agree that WB was using a script to take down the files and it just checked all results returned from the search without any verification.

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Well I haven't read anything on this, but it sounds like WB sued over specific links which Hotfile would have taken down or WB could have taken down with their special tool if they had wanted to. Instead WB sat on the information that these links were infringing and then sued Hotfile over them even though Hotfile couldn't know they were infringing without WB telling them

Hotfile is making the claim that WB said it was happy with the content filters, complimented Hotfile on their takedowns, yet kept their real opinions secret so that they could sue later.

To create a grossly exaggerated example of what this looks like to me ...

Girl to guy at work: You give such wonderful neck massages ...
Guy to girl at work: Thanks, would you like one?
Girl: Yes please

Standing

"The only thing I'm not sure about here, though, is whether or not Hotfile actually has standing to bring such a claim. I would have thought that it had to be done by the actual copyright holder of the content taken down (or someone else injured by such a takedown). I'm not sure that Hotfile can make such a claim."

So you think that WB damaging a business' reputation by falsifying DMCA takedowns doesn't constitute an injury to that business?

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Hotfile is saying that specific links it knew were infringing were not taken down.

Where are they saying that? The filing brief says no such thing. It says that there are links the WB knew were infringing, but didn't take down, even though WB was given a tool to do it, which they used to take down lots of non-infringing stuff.

It says that WB knew about these links. How does Hotfile know what WB knew?

Because WB is suing Hotfile over them.

Did WB explicitly say to Hotfile "Please don't take down these links, even though we know they're infringing?"

In essence, yes. Hotfile gave WB a tool that lets them see every file they host. Hotfile knows WB looked at these files, and didn't take them down. They then get sued over exactly these files.

Re: Will this contersuit open up discovery again?

You've clearly misunderstood the DMCA if you think Hotfile, as the party receiving the notices, is 'the party allegedly infringing.' The entire point of the safe harbor provisions is to recognize that third party content hosts are not infringing parties, that's why the takedown system exists in the first place.

Hotfile are being quite amusing and creative, but sadly, also misguided.

There is no requirement under the DMCA for the filing of a notice to be prompt. There is no legal requirement for a rights holder to act "expeditiously" to file. It is at their discretion. To blame Warner and the others is to blame the rape victim for not yelling loud enough. It's a horrible defence that makes Hotfile look even more guilty.

Hotfile's claims regarding "the box" and others shows that they are looking at the content, are aware of the content, and as such, bear at least some responsibility. If they are going to stand up for some rights holders but not others, they are pretty much sinking their own ship.

Too bad for the cyberlocker business, it looks like these guys are going to put you out of business.

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"There is no legal requirement for a rights holder to act "expeditiously" to file."

This has nothing to do with it, the fact is the laws says it was WB's responsibility to issue takedowns. Hotfile has shown they deliberately didn't for the only reason so they could sue for just those files, while taking down non-infringing content at the same time. You can kiss the asses of your industry gods all you want, WB was the one that decided not to issue takedowns.
Hotfile didn't, and doesn't have any way of knowing if its infringing, and apparently neither does your god WarnerBrothers.

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There's a ruling that covers this, I just can't find it. The argument was made that because the cease and desist letters did not contain any wording about the DMCA, that they couldn't be covered under the penalties for misusing the DMCA process. The judge's ruling was to theaffect of, 'if it looks like a DMCA notice, and quacks like the DMCA notice, you can be penalized under the DMCA misuse process.'

"They file what appears to be mostly a spiteful and poorly thought out response, and it merits a big post?"

That's got to be the funniest thing I've seen all week.

Translation for those at home: "I'm too busy trying to make Mike look bad because he can't follow my waaaah-bulance too closely. All I can do is throw out a spiteful post, throwing a temper tantrum because Hotfile has evidence that goes against Warner Bros impeding on other people's rights"

HotFile went above and beyond what was legally required to try and avoid the headaches this could cause.

Despite what the content holders want you to believe, not every file on HotFile or any other cyber locker is infringing material.

The content holders then filed a massive lawsuit and demanded every bit of data HotFile had, including all of the code to their site.

It then came out that HotFile had been actively working with the content holders to make it eaiser, but the content holders what to force them to provide even more.

HotFile filed a countersuit demanding all of the records of the content holders so they could prove or disprove all of the losses they claim. The Judge said no, and that saddened me. The Judge also blocked them from having all of the source code for the site.

HotFile then pointed out that WB had the ability to remove content, oh and by the way they started removing random content that was not infringing, and content owned by other content holders. This shows they were not this deep dark system that the content holders could not work with, and they were not shirking their duty.

WB is guilty of claiming ownership of other peoples content, and getting items that they have no real claim of ownership of from HotFile.

This begins to show the depths the content holders are willing to go, they are willing to break the law if they "think" it violates their copyright even if it has nothing to do with them.

At some point I hope to see sanity reintroduced into the system, but until such time as we can compel them to produce the proof of real losses, and not just "losses" in dying formats that don't sell so well any more we will continue to get the same.

I wish the Judge would reconsider making them have to turn over the proof of their supposed losses, so we can finally prove they are lying about the losses and attributing their lack of response to a changing consumer demand to piracy.

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Oh Jay, piss off. You know the deal. Hotfile got absolutely legally reamed out, one of the most complete and total orders by a court to turn over user, upload, and download logs and information, and Mike said squat. Now Hotfile files what is pretty much a laughable amount of legal mumbo-jumbo and hand waving, and it merits a big post?

If you can't understand how screwed up that is, and how Mike is trying hard to color the truth of the situation, then I really can't help you out.

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Again, if they are not obliged to file, where is the issue? Hotfile had been notified over and over about infringing material on their site, and chose to keep accepting more. WB decided it was time to "take out the trash" and let them pile up a bunch, and then executed.

That the judge ruled pretty much 100% on WB's side in issuing an order for Hotfile to disclose everything except their source code to the plaintiff speaks volumes here - although Mike doesn't want you to hear about it!

"Wouldn't impress me as a juror to learn there's so much that process had to be streamlined."

So, now you're saying that making a good faith effort to aid the copyright holders in identifying and removing content they believe is infringing, in excess of what's required in the law, is suspicious?

"We're removing LOTS of infringing content! And even some more! But Warner is lying their heads off!"

You've missed the major points of the criticism (what a bleeding surprise...), but let me spell it out for you:

1. Hotfile is not uploading the content, its users are. It's impossible for Hotfile to know exactly what's infringing, so it worked with copyright holders, providing WB with a tool to make this as easy as possible.

2. WB misused this tool, not only removing its own content, but content it has no rights over, including those uploaded by their actual creators.

3. Despite all of this, WB still sues Hotfile for infringement, even though what it is providing should be protected under safe harbours laws.

4. In response to an aggressively fought lawsuit against it by WB and others, Hotfile responds by bringing to light parts 1 & 2 above.

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"Hotfile's claims regarding "the box" and others shows that they are looking at the content, are aware of the content, and as such, bear at least some responsibility."

Or, it means that they saw a generic term that is 100% guaranteed to bring up false positives and noted the complaints they got from people who had their own content removed as a result.

Again, you make one-sided assumptions, make assertions based on these as if they were facts and then attack anyone who disagrees.

"Too bad for the cyberlocker business, it looks like these guys are going to put you out of business."

By "you guys", I assume you mean the legitimate software distributors who were using this as a means of legal distribution? It sure as hell isn't going to put a dent in "piracy", even as you fail to accept that the people you argue with here aren't pirates.

Is there an elephant in the room?

Is it me or am I reading it wrong? I see nobody that is worried that Hotfile gave WB some software that let's them delete files at will, without oversight. And nobody at Hotfile thought that was a recipe for disaster? They agreed to that without a court order and threat of grievous bodily harm?

Seriously, of all the things I've read on this site, that must be the scariest thing yet. So wherever you store something, Google for example, you're never sure that some random content company is not looking over your shoulder because they've been given a nice piece of software. Without informing the customer. Additionally if the name of my file corresponds to some random phrase they don't like, it will be deleted...

Correct me if I'm wrong but the idea of a "Locker" is that you store stuff in a place inaccessible for others, is it not? So, Hotfile is a service that calls itself a digital locker which (I assume, didn't check) advertises safety for your digital property and discretion but they give the keys to the first neigbourhood bully that passes by? Sounds like an invitation for a class action lawsuit.

I was already not overly fond of storing things in "The Cloud" but this convinces me I'm much better off keeping things on my local hard drive. No company on the net can be trusted with my files.

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Says the one too darn stupid to realize these 4 simple points mentioned by PaulT:

1. Hotfile is not uploading the content, its users are. It's impossible for Hotfile to know exactly what's infringing, so it worked with copyright holders, providing WB with a tool to make this as easy as possible.

2. WB misused this tool, not only removing its own content, but content it has no rights over, including those uploaded by their actual creators.

3. Despite all of this, WB still sues Hotfile for infringement, even though what it is providing should be protected under safe harbours laws.

4. In response to an aggressively fought lawsuit against it by WB and others, Hotfile responds by bringing to light parts 1 & 2 above.

So much for laughable laughable amount of legal mumbo-jumbo and hand waving. And as for "reaming", let's just see how close it'll come to the reaming Youtube received at the hands of Viacom.

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Agreed...but there's no way HotFile can know who has the rights to what. There will be obvious items. Such as WB trying to take down a Linux distribution. But what if the newest Batman was made by 20th Century Fox but WB has the distribution rights? There's just no way for HotFile to be able to know that.

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Except that:

1. Hotfile entered into an affiliate agreement to sell access to the content and pay the uploader. Effectively, they are the "ticket seller", and should know what they are selling.

2. People are using the tool as Hotfile defined - the more people you get to download, the more money you make. Clearly using the most popular content (illegal material) will boost income for both the uploader and Hotfile

3. Hotfile has received a staggering amount of DMCA notices since they opened, yet they do not appear to have changed their business model at all, even though they are aware that many of the files on their system that they profit from are infringing, and

4. Their response to the lawsuit appears both misguided and somewhat less than credible. Their business model is based on having the best content to make the most downloads. You don't think they would check at least the top downloads to see if it is infringing? It would make sense!

As for the "reaming", I don't remember YouTube being orders to turn over everything except it's source code to the plaintiffs, but you can correct me if I am wrong.

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1) Hotfile is selling access to a locker. Whatever someone puts INTO that locker is supposed to be none of their business.

2) No, the tool wasn't being used as defined, hence the warnings. Maybe Hotfile should have used three strikes against Warner Bros in order to determine why they should take that tool away.

3) If the DMCA takedowns were used falsely for content that was not the copyright holder's, then they should be charged for it.

4) I don't know how you seem to know what their business model is, since there are plenty of cyberlockers to choose from and the precedents have been set with mp3Tunes, Amazon and Google.

I guess what you really want is to just have larger businesses come in to offer cyberlockers instead of places like jdownloader, mediafire and Hotfile.

Also, just for the record... It's no one's business what's in a cyberlocker except the person uploading the content. If your business requires intruding on someone's private files, then there's a huge problem with your business.

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1. Making a profit does not automatically disqualify you from protections under DMCA's safe harbor provisions. That stipulation exists only in your mind, not the law.

2. Unsourced claims about popularity aside this is also in keeping with the safe harbor provisions. Again, popularity and monetization do not exempt a content host from them see: YouTube.

3. Hotfile is not required to change their business models because they receive a lot of DMCA notices. The law requires that they comply with the notices to continue enjoying safe harbor provisions. So, in fact, that law implicitly states they can keep doing what they were always doing after receiving notices because the point of the notice is to allow them to stay operational without changing anything after simply removing the accused content.

4. The DMCA does not require Hotfile to check the content based on the number of downloads. The burden of identifying infringing content belongs to the rights holders and the rights holders alone, hence the DMCA take-down procedures outlined by the law.

The claims of direct infringement have already been dismissed but keep clinging to that discovery judgement as evidence of a 'reaming' like a spare bit of flotsam dislodged from a sinking ship.

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1. Making a profit isn't the point, it is the business model. If the lockers contained nothing but someones crappy vacation photos and a video of little johnny riding his bike, there is no market. People aren't going to pay for it. They only pay for something that they both value and desire to get quickly.

2. See #1, the tool was used exactly as defined. Without popular content (aka, infringing material), there is no money in it for anyone. Nobody is lining up for your holiday pics, and they certainly aren't paying to get them.

3. See #1: Because the business model is predicated on people paying for access, you need to have a product worthy of paying for. What do you think people pay for? Hotfile's business model was to outsource the posting to affiliates, and to profit from it. It's a pretty clear deal, and it encourages infringement.

4. DMCA doesn't require them to check anything. But after getting tons and tons of DMCA notices, you would think that they would wake up and realize what is going on. Willful blindness to the actions of their business partners / affiliates has nothing to do with DMCA, and everything to do with acting in a reasonable fashion.

The discovery disclosure requires them to give over every piece of data, everything except the site source code. I am sure there will be more than enough in there to re-establish all of the charges, and I wouldn't be shocked if one or more of the big uploaders / affiliates turns on Hotfile and tells the truth.

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It's the reason you aren't a judge, because you are too big of a vindictive freetard to get it right.

TAC: You need to go back and look at Hotfile's business model, which is to take content, pay a commission based on "sales" of memberships to access it. The most popular files will almost always end up being infringing material. I suspect that the discovery granted to WB in this case will expose the true nature of the site, and of their business models.

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Hmmm, this seems to have generated some debate, although the morons don't seem to want to respond to me directly. Anyway...

1. Ah, the holiday video strawman. I remember this when it was talked about how nobody would ever profit from YouTube. Yet when the dust cleared and the idiots stopped whining, it's a great distribution platform where numerous profitable stars have been discovered. Sorry, your argument holds as much water as it did then.

2. See #1. You, as ever, take a ridiculous assumption and run with it as though it's the truth. Try attacking a non-strawman for a change.

3. Still extrapolating from a strawman and a lie! You presume intentions on the part of people you don't know nor understand then pretend that's a reason to attack them! I've seen racists with more reasoned and factual comments.

4. Another extrapolation from a falsehood. Lockers at train stations sometimes hold drugs, do you expect them to go through everybody's personal property or lose the lockers as well? If not, you're a moron and a liar.

"The discovery disclosure requires them to give over every piece of data, everything except the site source code"

You're yet to explain why this is a major issue, other than the overbearing nature of the order. You simply assume that the idiots you worship are in the right, so Hotfile's rights are void. This is simply idiocy.

"I wouldn't be shocked if one or more of the big uploaders / affiliates turns on Hotfile and tells the truth."

And I wouldn't be shocked if the tales of abuse of power and violations of rights made by Hotfile tell the truth. Hell, those software companies who distribute legally through Hotfile? Screw them, right, because some corporation needs more money?

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HotFile offers their service for free. The tradeoff for the free access was ad revenue. The user has to wait x time and see an ad that generates the money for HotFile.

HotFile offers a service, they do not load the servers themselves. They have the required DMCA take down system in place that the content holders do not feel is HotFile doing enough to protect the content holders rights.

When given the ability to get "extra" rights to stop the infringement they then proceeded to break the very law that protect their works. Even after HotFile went above and beyond what the law requires, they were still sued by the content makers under the delusion that because they made money they must be at fault. I wonder if its not moreso because the content holders are pissed off that someone else made money while they waste millions trying to keep a business model based on VHS/CD sales alive and viable.

HotFile provided the platform, they did not fill it.

Without bank robbers, cars and guns would not exist in your model. Without email, no one could write a nasty letter to the president. Without the web, Rupert Murdoch could not have brainwashed so many people.

And if this need was so nonexistant never to be filled, can you explain DropBox and the whole slew of other sites that offer cyberlockers to the average person.

While you would like to say how much content on HotFile MUST be infringing, you offer nothing to support that assumption. I often used HotFile and other cyberlockers to distribute a file I was maintaining for a game. The content was all user created and many people over time had edited the material, I was just the last person to maintain it.
I had no interest in setting up a website where I could host the file myself, so instead I used the cyberlockers to make sure the file was readily available to the other players who wanted it.
It seems cyberlockers do have a use that does not always rely on infringing material. It is a tool that some people have used in ways that might not be legal in some areas, but it is merely a tool and to hold them to a higher standard than the law requires because they made money is stupid.